Today’s S&P Core Logic Case-Shiller Home Price Indices Report indicated that nationally, seasonally adjusted home prices increased a notable 2.55% in March rising a whopping 20.55% above the level seen a year earlier. The 20-city index also increased notably rising 3.07% on the month and 21.17% above the level seen in March 2021 while the 10-city index increased 2.84% and 19.51% respectively.
It’s important to note that this data lags a bit and that most (if not all) home sales included in today’s data-set likely settled while mortgage interest rates were still in the 3 percent range.
That said, the Case-Shiller home price index is really the “gold standard” in home price data and very accurately reflects the price trends in the tracked markets. There are other home price indices that also merit attention and I will feature these in due time.
The methodology behind the Case-Shiller indices was really a significant innovation in that it succeeded in eliminating the distorting effects that are present in the simple median or average home price data published by the National Association of Realtors by utilizing a three month moving average of the price change in numerous sale pairs (i.e. a house that recently transacted with a true “arms-length” sale thereby creating a pair of true market settled prices between the current and last sale) and then value-weighting to adjust for changes in house quality.
As I understand it, Dr Case and Dr Shiller formulated this approach and implemented the construction of these indices for some time just using research students, a significant achievement given the labor involved in gathering and vetting all the source data.
A short digression though…
When I was more actively blogging way back in 2008, I was pleasantly surprised by how approachable and accessible Dr Case was. He was very enthusiastic about interacting through email, over the phone and in person (at presentations) and he even submitted a post for me to exclusively publish on my blog entitled “Why Am I Optimistic” (replete with data, docs and excel files and, funny enough, all attached to a single email entitled “answer to the daggers”) within which he made a very measured and sensible analysis of the housing market and some predictions that, looking back at them now, were pretty darn accurate particularly with respect to the Boston market in which we both lived.
Further, he was very encouraging of my development of Blytic.com (mothballed at this point... someday I’ll get back to it), an early macro-econ data service very similar to (but pre-dating) the Fed
Fred system and his feedback was very motivating and made a huge impression on me while I was in the throes of that endeavor.
When he retired in 2009, I was sad to learn that he had done so because he had unfortunately developed Parkinson’s disease and really saddened to hear of his passing in 2016 at the way too young age of 69.
Dr Case was a great teacher and even though I never attended a single class of his at Wellesley, my interactions with him over those years leaves me with a sense of being very fortunate to have been one of his many students.
The following data visualization (click for dynamic view) shows the S&P Core Logic Case Shiller Home Price National Index since late-2006 with the index value (in blue) on the left axis and the year-over-year change (in red) and month-to-month change (in green) on the right axis.
Like the above post? Consider subscribing to my Substack for additional insights and content today!
